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In another crippling blow, Scranton’s struggling pension funds are on the hook for an additional $6.9 million to $10.5 million.

The city’s composite pension board learned Wednesday of the hefty price tag associated with a 2011 state Supreme Court ruling that awarded the city’s police and firefighters $21 million in back pay.

The board, which represents Scranton fire, police and non-uniform employees, has known for years the funds were facing a significant financial hit. The exact amount was not known until Wednesday, when solicitor Larry Durkin released information from a report by an actuary hired to analyze the impact.

Mr. Durkin said the figure was in line with what was expected, but still represents a “devastating” blow to the police and fire funds, which have been severely financially distressed for years.

“The funding level is inadequate to pay under the current structure. Now you are taking out another $6.9 (million) to $10.5 million” Mr. Durkin said.

The debt to the pension funds is in addition to the back pay the city already owes active police officers and firefighters. The retirees benefit because they are entitled to a portion of any pay increases given to active members.

The funds will get a partial reprieve in that the money does not have to be paid to retirees until after the active members are paid, Mr. Durkin said. It’s not known when that will occur as the city continues to struggle to find a funding source for the back pay award.

Mr. Durkin noted the debt would be spread, roughly equally, between the police and fire pension funds. None would be assigned to the non-uniform fund since those employees are not part of the back pay award, he said.

The exact impact the new liability will have on the financial health of the funds is not known yet. Given their current financial state — both have deficits of tens of millions of dollars — there’s a question as to whether the debt will cause the funds to become financially unsound.

An actuary is now analyzing data. Should the actuary determine the funds would become unsound, the city code would preclude the city from making the payments, Mr. Durkin said. He acknowledged that likely would lead to further litigation from police and fire unions.

The exact cost to the plans also is not known. Mr. Durkin said the actuary provided a range of $6.9 million to $10.5 million because there remains a dispute over whether the retirees are owed interest and whether family members, other than widows, of retirees who died during the pendency of the back pay dispute are entitled to the increases the retiree would have received during their lifetime.

Mr. Durkin said he does not believe retirees are owed interest because they are not entitled to the money until after active members have been paid, and that has not happened yet. He used that same reasoning to determine that the estates of deceased retirees are not eligible for payment.

John Judge, president of the firefighters union, advised the board the union believes its retirees are entitled to the interest because it was included in a settlement the union reached with the city. The union also contends it is wrong to deny the families of deceased firefighters increases they were due because the delay was caused by the city.

“The city waited so long to make the payment. If it waits long enough, the retirees will die off and it will not have to pay anything,” Mr. Judge said.

Contact the writer:tbesecker@timesshamrock.com

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